The recent commentary on the VSECU/NEFCU merger by VSECU board chair Spencer Newman was full of sugar and short on protein.
The rationale for the proposed merger is still entirely based on the bigger-is-better fallacy. Yes, both institutions have a rich history. Yes, each institution has changed and adapted to an evolving financial services industry. Yes, the cooperative business model is powerful. The rest of the commentary is misleading or just plain sugar.
Starting with the misleading: When it is suggested that this merger will create an additional $113 million in funds available to lend to Vermont businesses, the truth is that those funds are already available. Both VSECU and NEFCU have lent less than 50% of the funds they are allowed for commercial lending. VSECU could lend another $50 million. NEFCU could loan another $100 million.
To imply that this merger somehow magically makes $113M appear out of thin air for Vermont’s businesses is not truth in marketing. It is sugar.
Our suspicions about what or who is driving this merger proposal only grow more intense when one justification for the merger is presented as the opportunity to “expand our generational membership.” No data is given to validate that statement, but then who could possibly know what it means? When it is stated that combining mortgage operations will help “younger people and more families stay connected,” it’s just adding sugar unless there’s an explanation of how the proposed merger enhances family “connectivity.” When it is stated that this merger helps more Vermonters attain “environmentally conscientious” homes — how exactly does this merger do that? VSECU already leads the state in the energy efficiency arena. Why would the board turn control of that foresight over to someone else?
The point is that all the product and service capacity that the merger will supposedly create exists today without a merger. This proposed merger does not create more credit union members or more Vermonters. Thanks to the VSECU statewide field of membership, every Vermonter has access today to all of the most up-to-date products offered in the marketplace. Can VSECU continue to do that? Absolutely! It has all the scale and resources necessary.
So we are left with the only tangible benefit of this merger being a few more branches for a few members? Haven’t we also heard from the “leadership” that fewer and fewer consumers are using branches and that technology is the future of banking?
We’re waiting to be told that there is more substance (protein) to this merger. We’re waiting for answers to questions we’ve asked and submitted directly to the board of directors and posted on the website callingallmembers.org.
We need some good old Vermont straight talk. Sugaring season is over!
Steven D. Post of Montpelier, former CEO of VSECU
M. Jerome Diamond and Kimberly B. Cheney, both former VSECU directors and board chairs
